Kerala Assembly Clears VAT Bill

Thiruvananthapuram, February 27: | Updated: Feb 28 2003, 05:30am hrs
Kerala has become the second state to pass VAT legislation. Kerala Value Added Tax Act was passed on Thursday amidst noisy scenes in the state assembly over police harassment of tribals.

Madhya Pradesh was the first state to be ready to go on VAT route from April with legislation. Eight governments - Andhra Pradesh, Delhi, Gujarat, Haryana, Karnataka, Punjab, Uttar Pradesh and West Bengal - are now ready with the Bills.

In Kerala, the turbulence in the assembly over the Muthanga issue limited the time for VAT discussion on Thursday. In 20 minutes, discussions on 98 clauses were rushed through and the Bill passed. Apart from the amendments made by the subject committee, tax on beedi was also removed on Thursday. As iFEr had reported earlier, waiver to non-corporate farm producers has emerged the key value-addition of Kerala VAT Act to the NIPF-model Bill (National Institute of Public Finance) recommended by the Centre. In the first vetting, the House's Subject Committee on Economic Affairs had last week clamped a VAT-exemption amendment to farmers and producers of farm products.

The Subject Committee had earlier also eased the turnover-threshold of traders allowed to pay presumptive tax from Rs 5 lakh to Rs 20 lakh. This is almost on par with the neighbouring states of Tamil Nadu (Rs 15 lakh) and Andhra Pradesh (Rs 20 lakh).

The stretching of the turnover threshold means that traders in Rs 2 lakh and Rs 20 lakh category can opt for the presumptive tax or VAT. Instead of the present Rs 5000, the presumptive tax will be two per cent of the turnover. While VAT payees are to make monthly returns, presumptive tax payees need make returns only once in three months.